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Why Is Amgen (AMGN) Up 12.9% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Amgen Inc. (AMGN - Free Report) . Shares have added about 12.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Fourth-quarter 2016 earnings of $2.89 per share beat the Zacks Consensus Estimate of $2.77 by 4.3% and were up 11% from the year-ago period. Higher revenues and operating margins drove the bottom line.
Total revenue increased 8% to $5.97 billion in the fourth quarter of 2016, beating the Zacks Consensus Estimate of $5.74 billion by 3.9% driven by higher product sales.
Currency impact hurt sales by less than 1% in the quarter.
Quarter in Detail
Total product revenue rose 6% from the year-ago quarter to $5.66 billion (U.S.: $4.50 billion; ex-U.S.: $1.16 billion) as strong performance of Enbrel and Prolia was offset by lower sales of established brands like Epogen, Neulasta and Neupogen.
Revenues of Amgen’s erythropoiesis-stimulating agent (ESA), Aranesp, grew 5% from the year-ago quarter to $526 million, reflecting higher unit demand in the U.S. given the shift in dialysis customer purchases from Epogen. Amgen does not expect much transition to Aranesp, going forward.
Revenues of the other ESA, Epogen, declined 8% to $316 million, reflecting a shift in dialysis customer purchases to Aranesp as well as the impact of competition. Amgen does not expect Epogen biosimilars in the U.S. until late 2017.
While Neulasta revenues declined 3% to $1.12 billion from the year-ago period due to lower unit demand, Neupogen recorded a 34% decline in sales ($173 million) due to biosimilar competition in the U.S. Zarxio, Sandoz’s biosimilar version of Neupogen, was launched in the U.S. in Sep 2015 and is hurting sales.
The company expects Neulasta to face biosimilar competition in the U.S. from the fourth quarter of 2017. Neupogen is expected to face continued competitive pressure in 2017 from existing and potentially new biosimilars.
However, the Neulasta Onpro kit (on-body injector) continues to perform well and ended 2016 with an approximate 50% share in the U.S. for all Neulasta sales
Enbrel delivered revenues of $1.64 billion, up 14% from the year-ago quarter, as higher net selling price and increase in end customer inventory levels offset the impact of increased competition. Sequentially, Enbrel’s market share in both rheumatology and the dermatology segments remained relatively steady in the fourth quarter. However, the large inventory build for Enbrel in the fourth quarter is expected to reverse to the tune of approximately $150 million in the first quarter of 2017.
On the call, management maintained that it expects minimal net price growth for Enbrel in 2017, which could hurt sales. According to management, Enbrel volume trends in 2017 will be similar to 2016 levels.
Prolia revenues came in at $463 million, up 22% from the year-ago quarter due to higher demand. Prolia volume growth continued to improve as the company continues to capture share across the U.S. and EU.
Meanwhile, Xgeva delivered revenues of $376 million, up 6% from the year-ago quarter mainly due to higher demand.
Sensipar/Mimpara revenues increased 7% to $411 million due to higher price.
Vectibix revenues came in at $143 million, up 6% driven by higher demand.
Nplate sales increased 9% to $150 million driven by higher demand.
Kyprolis posted sales of $183 million, up 24% year over year, reflecting higher unit volume in both the U.S. and international markets. The company said that competition in the multiple myeloma market is increasing.
Blincyto sales surged 32% from the year-ago period to $29 million, reflecting higher demand.
Repatha generated revenues of $58 million, up from $40 million in the third quarter.
Operating Margins Increase
R&D expenses were flat in the quarter, while SG&A spend declined 4% due to the Oct 2016 expiration of Enbrel residual royalty payments.
Adjusted operating margin rose 610 basis points (bps) to 50.5% due to higher revenues and lower operating costs, reflecting continued benefits from transformation and process improvement efforts.
Amgen bought back shares worth $1 billion in the quarter. In full year 2016, Amgen bought back shares worth $3.0 billion. At the end of 2016, Amgen had $4.1 billion remaining under its $5 billion stock repurchase plan.
2016 Results
Full-year sales improved 6% to $22.9 billion, beating the Zacks Consensus Estimate of $22.76 billion. Revenues were also slightly above management’s guided range of $22.6–$22.8 billion.
Adjusted earnings came in at $11.65 per share, up 12% year over year, and surpassed the Zacks Consensus Estimate of $11.53. Earnings were also above the projected range of $11.40 to $11.55.
2017 Guidance
The company expects total revenue in a range of $22.3 billion to $23.1 billion and earnings of $11.80 to $12.60 per share in 2017. The sales guidance fell slightly short of the then Zacks Consensus Estimate of $23.41 billion.
Foreign exchange headwinds are expected to have an unfavorable impact of approximately 1% on top-line growth and $0.20 on adjusted EPS.
Other revenues in 2017 are expected to be $200 million lower than in 2016, which had benefited from rising royalty income & out-licensing transactions.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, Amgen's stock has an average score of 'C' on growth and momentum front. Following a similar course, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than growth and momentum investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Amgen (AMGN) Up 12.9% Since the Last Earnings Report?
A month has gone by since the last earnings report for Amgen Inc. (AMGN - Free Report) . Shares have added about 12.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Amgen Fourth-Quarter Earnings & Sales Beat Estimates
Fourth-quarter 2016 earnings of $2.89 per share beat the Zacks Consensus Estimate of $2.77 by 4.3% and were up 11% from the year-ago period. Higher revenues and operating margins drove the bottom line.
Total revenue increased 8% to $5.97 billion in the fourth quarter of 2016, beating the Zacks Consensus Estimate of $5.74 billion by 3.9% driven by higher product sales.
Currency impact hurt sales by less than 1% in the quarter.
Quarter in Detail
Total product revenue rose 6% from the year-ago quarter to $5.66 billion (U.S.: $4.50 billion; ex-U.S.: $1.16 billion) as strong performance of Enbrel and Prolia was offset by lower sales of established brands like Epogen, Neulasta and Neupogen.
Revenues of Amgen’s erythropoiesis-stimulating agent (ESA), Aranesp, grew 5% from the year-ago quarter to $526 million, reflecting higher unit demand in the U.S. given the shift in dialysis customer purchases from Epogen. Amgen does not expect much transition to Aranesp, going forward.
Revenues of the other ESA, Epogen, declined 8% to $316 million, reflecting a shift in dialysis customer purchases to Aranesp as well as the impact of competition. Amgen does not expect Epogen biosimilars in the U.S. until late 2017.
While Neulasta revenues declined 3% to $1.12 billion from the year-ago period due to lower unit demand, Neupogen recorded a 34% decline in sales ($173 million) due to biosimilar competition in the U.S. Zarxio, Sandoz’s biosimilar version of Neupogen, was launched in the U.S. in Sep 2015 and is hurting sales.
The company expects Neulasta to face biosimilar competition in the U.S. from the fourth quarter of 2017. Neupogen is expected to face continued competitive pressure in 2017 from existing and potentially new biosimilars.
However, the Neulasta Onpro kit (on-body injector) continues to perform well and ended 2016 with an approximate 50% share in the U.S. for all Neulasta sales
Enbrel delivered revenues of $1.64 billion, up 14% from the year-ago quarter, as higher net selling price and increase in end customer inventory levels offset the impact of increased competition. Sequentially, Enbrel’s market share in both rheumatology and the dermatology segments remained relatively steady in the fourth quarter. However, the large inventory build for Enbrel in the fourth quarter is expected to reverse to the tune of approximately $150 million in the first quarter of 2017.
On the call, management maintained that it expects minimal net price growth for Enbrel in 2017, which could hurt sales. According to management, Enbrel volume trends in 2017 will be similar to 2016 levels.
Prolia revenues came in at $463 million, up 22% from the year-ago quarter due to higher demand. Prolia volume growth continued to improve as the company continues to capture share across the U.S. and EU.
Meanwhile, Xgeva delivered revenues of $376 million, up 6% from the year-ago quarter mainly due to higher demand.
Sensipar/Mimpara revenues increased 7% to $411 million due to higher price.
Vectibix revenues came in at $143 million, up 6% driven by higher demand.
Nplate sales increased 9% to $150 million driven by higher demand.
Kyprolis posted sales of $183 million, up 24% year over year, reflecting higher unit volume in both the U.S. and international markets. The company said that competition in the multiple myeloma market is increasing.
Blincyto sales surged 32% from the year-ago period to $29 million, reflecting higher demand.
Repatha generated revenues of $58 million, up from $40 million in the third quarter.
Operating Margins Increase
R&D expenses were flat in the quarter, while SG&A spend declined 4% due to the Oct 2016 expiration of Enbrel residual royalty payments.
Adjusted operating margin rose 610 basis points (bps) to 50.5% due to higher revenues and lower operating costs, reflecting continued benefits from transformation and process improvement efforts.
Amgen bought back shares worth $1 billion in the quarter. In full year 2016, Amgen bought back shares worth $3.0 billion. At the end of 2016, Amgen had $4.1 billion remaining under its $5 billion stock repurchase plan.
2016 Results
Full-year sales improved 6% to $22.9 billion, beating the Zacks Consensus Estimate of $22.76 billion. Revenues were also slightly above management’s guided range of $22.6–$22.8 billion.
Adjusted earnings came in at $11.65 per share, up 12% year over year, and surpassed the Zacks Consensus Estimate of $11.53. Earnings were also above the projected range of $11.40 to $11.55.
2017 Guidance
The company expects total revenue in a range of $22.3 billion to $23.1 billion and earnings of $11.80 to $12.60 per share in 2017. The sales guidance fell slightly short of the then Zacks Consensus Estimate of $23.41 billion.
Foreign exchange headwinds are expected to have an unfavorable impact of approximately 1% on top-line growth and $0.20 on adjusted EPS.
Other revenues in 2017 are expected to be $200 million lower than in 2016, which had benefited from rising royalty income & out-licensing transactions.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Amgen Inc. Price and Consensus
Amgen Inc. Price and Consensus | Amgen Inc. Quote
VGM Scores
At this time, Amgen's stock has an average score of 'C' on growth and momentum front. Following a similar course, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than growth and momentum investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.